Is IndyMac on the verge of Bankruptcy? Stock falls below $1 after being hit with a run on the bank on Saturday· After some depositors pull funds, IndyMac responds to latest rumors about its health; says it's working with regulators - (latimesblogs.latimes.com) Pasadena-based mortgage lender IndyMac Bancorp, battling fresh rumors that it is near collapse, conceded today that its financial position "has deteriorated since last quarter," and said it was working on a plan with its regulators to improve "the safety and soundness" of the bank.· Late Day Update: Indymac Closes Commercial Unit, Depositors Withdrawing Funds - (www.ml-implode.com) - At 5:45 pm (EST), the following email was sent to customers of Indymac's commercial lending unit, Indymac Commercial Lending Corp.:"ICLC, due to the current market and capital constraints has ceased lending operations as of 7/1/08. A formal announcement from ICLC will be coming out tomorrow regarding details and loans in process." Referring to today's press release on The IMB Report, Indymac's company web site, an LA Times report refers to "a weekend that saw depositors line up at some of its San Gabriel Valley branches to pull their money, as they reacted to news reports questioning the company's survival." Indymac's article responds with "while branch traffic is somewhat elevated this morning, it is substantially lower than on Saturday, and we are hopeful that this issue appropriately abates soon..."· Schumer: concerned over IndyMac stability - (www.ap.com)· [$$] Schumer Asks Regulators For Greater IndyMac Scrutinyat - (us.rd.yahoo.com/finance/external/wsj)· CRL: Indymac Dug Its Own Grave - (www.thetruthaboutmortgage.com) - The Center for Responsible Lending has impeccable timing, considering the fact that Indymac is trading at its lowest point ever amid mounting solvency concerns.The group released a 22-page report today outlining the Pasadena, CA-based mortgage lender’s failings, accusing the company of “unsound and abusive lending” during the recent boom. The report includes interviews with former employees, which among other things, claim Indymac padded borrower income, used bogus appraisals, worked with misleading mortgage brokers, and treated minorities and the elderly unfairly.· IndyMac Update: Shares Down On More Bad News - (www.ml-implode.com)

Will Lehman Brothers suffer the same fate as Bear Stearns? It will likely (within next month) be bailed out by the Fed or Barclays· Lehman falls on talk of possible sale to Barclays - (www.ap.com) - Lehman Brothers Holdings Inc. shares fell sharply (over $2.4/share) Monday amid speculation that the nation's fourth-largest investment bank might be acquired by Britain's Barclays PLC at a discount price.· Lehman up after Morgan Stanley's overweight rating - (www.reuters.com) – Yet Morgan Stanley changes rating to “overweight”. We should know in less than a month if MS was unethically trying to protect their interest or if Lehman gets acquired at $31/share.· [$$] Lehman Hits Lowest Level Since 2000 Amid Buzz - (us.rd.yahoo.com/finance/external/wsj)

Court Ruling Could Shock Entire U.S. Mortgage Industry - (www.ml-implode.com) - A lawsuit filed by a Wisconsin couple against their mortgage lender could have major implications for banks should a U.S. appeals court agree that borrowers can cancel their loans en masse when their lenders violate a federal lending disclosure law.BIS slams central banks, warns of worse crunch to come - (www.telegraph.co.uk) A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate. The venerable body, the ultimate bank of central bankers, said years of loose monetary policy had fuelled a dangerous credit bubble that would entail "much higher costs than is commonly supposed". In a pointed attack on the US Federal Reserve, it said central banks would not find it easy to "clean up" once property bubbles have burst. If only we had all listened to the BIS a long time ago. Ensconced in its Swiss lair, it has fired off anathemas for years, struggling to uphold orthodoxy against the follies of modern central banking. Bill White, the departing chief economist, has now penned his swansong, the BIS's 78th Annual Report, released today. It is a disconcerting read for those who want to hope the global crisis is over. "The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point," it said. "These fears are not groundless. The magnitude of the problems yet to be faced could be much greater than many now perceive," it said. "It is not impossible that the unwinding of the credit bubble could, after a temporary period of higher inflation, culminate in a deflation that might be hard to manage, all the more so given the high debt levels."Next Victim of Real Estate Bubble: Government - (www.businessweek.com) - State and local governments were flush with tax revenue during the five-year housing boom. They pulled from bulging pools of property, income, and sales tax to expand education, law enforcement, health care, and infrastructure programs without needing to burden residents and corporations with tax hikes. Those days are over. Home prices are falling, and foreclosures, gas prices, unemployment, and inflation are on the rise. At least 29 states, plus the District of Columbia, reported budget shortfalls that total about $48 billion as they finalized their 2009 fiscal budgets, which typically begin July 1, according to the Center on Budget & Policy Priorities.Credit crisis fallout to limit houseowner spending - (www.reuters.com) "(U.S.) household spending now seems likely to weaken in response to high debt and service burdens, falling employment and the general tightening of credit conditions," it said.A growing trend of negative equity -- where falling house prices leave homeowners with a mortgage bigger than their property's value -- is also expected to corset the borrowing ability of U.S. households. In some parts of the United States, houses have halved in value over the last two years as the property bubble has popped and mortgage defaults surge while builders flood already saturated markets with new properties. "As housing prices fall and credit conditions tighten, (more) such loans are likely to default because borrowers have few alternative financial resources," BIS said.The Greenspan Gamble - (www.rgemonitor.com) it appears to me that the "Super Fed" could actually happen. Many of the other changes require consolidation of regulatory agencies, and bureaucracies seldom go gently into that good night. They and their constituents will fight for survival and probably win. But the Fed expansion is likely to be seen as the solution the problem of risk that the housing bust has made apparent. But wait. Isn't this the same Fed whose 1 percent fed funds rate helped inflate the great Housing and Mortgage Bubble that is now popping? Didn't this lead to massive losses, illiquidity, and panic? Wasn't the bubble exactly the sort of systemic risk that the new, more powerful Fed is expected to effectively manage?

Bank of America's Parking Meter Play - (globaleconomicanalysis.blogspot.com) - As B of A stock continues to fall apart since announcing the acquisition of Countrywide, they are resorting to new cash raising tricks. Reader Gary used his Bank of America credit card to pay $2 on a parking meter in Washington, DC. Bank of America treated it as a cash advance and slapped him with a $10 fee, as well as a higher APR. When Gary called to complain, he learned that it wasn't an error: Bank of America has started treating payments to parking meters as cash advances and may even treat all payments to government entities as cash advances. In the meantime, please remember that any cash or pseudo cash transactions might get you whacked for $10 or higher, plus interest.

If you are doing any of those things... Stop now. Banks are so greedy, and/or so desperate that not only are they charging ridiculous interest rates, they are willing to ding you with a $10 fee on a $2 transaction.

The Real Estate Nightmare I Found In Las Vegas - (www.ml-implode.com) - The Indy Mac performing loan sale that was reported to have been done at about 60% of asking price has fallen apart. Most of the bids at the 60% level were withdrawn after further due diligence. The actual prices the stuff went for is between 20% and 45%. By the way Indy Mac had current appraisals supporting their asking price. The Wall Street Wizards are proving to be particularly inept at working out real estate problems. Essentially, they don’t know anything about operating real estate. On top of that, many of the banks don’t have expertise so there seem to be a lot of bad decisions going down (much more about this later). Things are going downhill so fast that deals that were struck 3 months ago need to be restructured.Congress makes same mistake: lending assuming prices will go up - (www.csmonitor.com) Congress hopes to pass a bill soon that aims to rescue enough at-risk homeowners to put a price floor under a collapsing housing market. In theory, everyone benefits. In practice, well, the rescue plan itself might end up needing a rescue, at taxpayers' expense. While those points may well be grounds for federal action, the bill that is likely to pass could end up committing the same mistake careless lenders and borrowers did in inflating the housing bubble: It assumes prices will soon rise and that the new government-backed loans to be negotiated in coming months won't go belly up. The bill, in other words, sets up Uncle Sam to try and catch a falling dagger. The heart of the measure would allow the Federal Housing Administration to insure up to $300 billion in new loans for at-risk borrowers, but only if lenders take a hit by volunteering to issue a new loan at 15 percent below the appraised value of the borrowers' homes. Sure, borrowers would need to meet strict criteria and show they have the income and credit record to accept the new, lower-interest mortgages. And they must actually be living in the home, which shoos away many speculators. (Studies show a majority of the foreclosures so far involved financial misrepresentations by the borrower.)CEPR's Dean Baker - "It would be the height of foolishness to create a house price support program to try to sustain the bubble" - (www.ml-implode.com) " CEPR's Dean Baker - "It would be the height of foolishness to create a house price support program to try to sustain the bubble" "Dow Jones: Worst June Since Depression - (www.bloomberg.com) U.S. stocks tumbled, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as record oil prices, credit-market writedowns and a slowing economy threatened to extend a yearlong profit slump. General Motors Corp., the largest U.S. automaker, plunged the most in three years as Goldman Sachs Group Inc. advised selling the stock and crude rose by $5 a barrel. Citigroup Inc. led the KBW Bank Index to an almost 10-year low as Goldman said the lender may report an $8.9 billion second-quarter charge and cut its dividend. Research In Motion Ltd., maker of the BlackBerry, posted its biggest drop since 2001 on concern competition with Apple Inc.'s iPhone is reducing earnings.Lawmakers' zeal versus speculators could backfire - (www.reuters.com) U.S. Congress is suddenly determined to bring rampant trading under control. But rather than looking at excess consumption and demand, Congress is entering the murky waters of trying to control soaring prices, mulling bills that could well backfire and drive funds to less transparent but more accommodative bourses offshore. In just one of a slew of bills, the House of Representatives overwhelmingly passed largely symbolic legislation on Thursday ordering regulators to "curb immediately" excessive speculation in commodity markets.Global markets reel after first-half carnage - (http://www.ft.com/) Global equities were heading for their worst first-half performance in 26 years after a week in which oil surged to a record and there were renewed worries about the health of the financial system and ­global growth - 22:26Credit-Card Debt Snaring More High-Income People - (www.cnbc.com)Fed Worried About Its Own Risk During Bear Rescue - (www.cnbc.com)As Bill Evolves, Mortgage Debt Is Snowballing - (www.nytimes.com) Congress’s rescue package for homeowners may only be able to touch a fraction of those in trouble, analysts say.Public service work can wipe out student loans - (www.latimes.com) A new law will make it possible for student debt to be forgiven for people who choose public service jobs. >>Senators warn Fed, SEC to halt expansion of oversight duties - (www.latimes.com) Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairman Christopher Cox were warned by two top senators not to proceed with a plan to take on more oversight of Wall Street until they consult with Congress.Cramer: GM Should File for Bankruptcy - (www.thestreet.com)

Thursday, June 26, 2008

Fears grow of new stage in credit crisis - (www.ft.com) Progressive Moulded Products has become the latest motor parts company to file for Chapter 11 bankruptcy protection, inflicting losses on its owner, private equity firm Thomas H. Lee Partners and lenders led by Goldman Sachs. Thomas H. Lee is expected to see its $200m investment go to zero while Goldman, which provided a slug of junior, mezzanine debt is also likely to lose everything. The company has about $550m debt.US commerce secretary upbeat on economy - (www.ft.com) - The US economy emerged from the first quarter in better shape than the initial data suggested and remains on a positive growth trajectory, Carlos Gutierrez, commerce secretary, has told the Financial Times. “The composition of growth looks healthier than what we showed the first time when inventories were doing most if not all of the growth,” said Mr Gutierrez, the former chief executive of Kellogg. “I find it very interesting and very impressive that the economy grew 1 per cent in spite of all the dire predictions we had at the time,” he said. Mr Gutierrez said consumer spending was on a more resilient trajectory than many analysts thought even before households received tax rebate cheques. Good news (Sarcasm intended). It is great to be the owner of the data, free for you to manipulate.Tavakoli On Ignoring Ratings - (watch.bnn.ca) Must watch video. Stay Away From Bond Insurance & Please Ignore Ratings Agencies: BNN discusses with Janet Tavakoli, president, Tavakoli Structured Finance. Very good discussion on additional $125B in product that still needs to be written down.Fed may ease rules on bank buy-outs - (www.ft.com) The Federal Reserve is considering making it easier for private equity firms to take large stakes in banks, without being subject to existing restrictions and commitments, as part of efforts to encourage capital-raising in the troubled US financial system.Reverse: Condo Association foreclosing on Wells Fargo - (www.dailybusinessreview.com) Yes, the tables have been turned!!! The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees. The lender owes $32,252 in late maintenance fees on the unit it took back more than a year agoUpdate: IndyMac slides below $1.00 -- 50/50 chance? - (www.ml-implode.com) - IndyMac shares are finally down to a mid-day low of $0.94 at one point. One of our sources states, "Pretty much we were told informally that if we did not get a capital infusion we would not make it and that we had a 50/50 chance of obtaining said infusion.Chrysler woes spark bankruptcy rumour - (www.theaustralian.new.com.au) Speculation Chrysler might seek bankruptcy protection has served to further deflate investor confidence in the company's debt. Some loans are trading as low as US50 cents on the dollar. A Chrysler spokesman said the company has ample liquidity and that a bankruptcy filing is "not on the table."Chrysler denies bankruptcy talk, welcomes Iacocca - (www.businessweek.com)German shares close markedly lower on Chrysler bankruptcy talk UPDATE - (www.forbes.com)Low-rated borrowers getting squeezed out of debt markets - (www.financialweek.com) – And this is a problem??? This was the same reasoning that allowed 70% home-ownership. There is a reason people and companies should not get loans. They have proven they have no ability to repay these loans.Root cause of bubble disaster: Federal Reserve - (www.sfgate.com) – BINGO. Time to try and jail Alan Greenspan for hiding the truth from the American people and creating a large disaster. Federal Reserve policy lies at the heart of the crisis. In response to a high-tech bust, the Fed lowered interest rates to stimulate a housing sector that already enjoyed boom conditions. That mismatch of diagnosis and treatment built the foundation of all that followed, including the Fed's current difficulty in resuscitating residential real estate.House of Cards - (www.lacitybeat.com) - While many eyes are focusing on the housing meltdown and its hugely negative effect on an economy clearly moving into recession, few are paying attention to the next bubble expected to burst: credit cards. Combined with the subprime losses, such a credit card nightmare has the potential, experts say, of bringing down the entire financial system and global economy. You and your credit card have become key players in the highly unstable financial crunch. Mortgage lender cupidity and bank credit card greed wedded to financial institution deregulation supported by both political parties, have been made manifestly worse by Bush administration support-the-rich policies. It has brought us to a brink not seen since just before the Great DepressionVital Part of Housing Bill Is Brainchild of Banks - (www.washingtonpost.com) A key provision of the housing bill now awaiting action in the Senate -- and widely touted as offering a lifeline to distressed homeowners -- was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials. Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt.After the bank proposed this to Congress in January, it became known as the "Credit Suisse plan" among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.Bank of America, which is acquiring Countrywide Financial, the country's largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said. In approaching congressional aides, the lobbyists suggested that banks take less than full payment for the distressed loans on their books. But the measures would allow financial institutions to get cash out of foreclosed properties that would otherwise sit on their books as dead weight.

Wednesday, June 25, 2008

Vital Part of Housing Bill Is Brainchild of Banks - (www.washingtonpost.com) A key provision of the housing bill now awaiting action in the Senate -- and widely touted as offering a lifeline to distressed homeowners -- was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials. Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt. After the bank proposed this to Congress in January, it became known as the "Credit Suisse plan" among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.Bank of America, which is acquiring Countrywide Financial, the country's largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said. In approaching congressional aides, the lobbyists suggested that banks take less than full payment for the distressed loans on their books. But the measures would allow financial institutions to get cash out of foreclosed properties that would otherwise sit on their books as dead weight.High Medicare Costs, Courtesy of Congress - (www.nytimes.com) On Wal-Mart’s Web site, you can buy a walker for $59.92. It is called the Carex Explorer, and it’s a typical walker: a few feet high, with four metal poles extending to the ground. The Explorer is one of the walkers covered by Medicare. But Medicare and its beneficiaries aren’t paying $59.92 for the Explorer or any similar walker. In fact, they’re not paying anything close to it. They are paying about $110. For years, Congress has set the price for walkers and various medical equipment, and it has consistently set them well above the market rate, effectively handing out a few hundred million dollars of corporate welfare every year to the equipment makers.Calif. attorney general sues Countrywide Financial - (www.ml-implode.com) – First Illinois, now California. Funny how CA AG did not sue until days before the merger with BofA. When Countrywide was a CA corporation, CA was fine with all the lending practices. Now that they are ready to move HQ out to the East Coast, time to sue. "Countrywide Financial Corp. is accused of using misleading advertising and other unfair business practices to trick borrowers i...Countrywide's Licenses Revoked By State of Washington - (www.ml-implode.com) - Gov. Chris Gregoire says the state is pulling the license of Countrywide Home Loans to write loans in Washington and that invest...Illinois to Sue Countrywide, CEO Mozilo - (www.cnbc.com) The lawsuit is the first known case of a state authority charging Countrywide, the largest U.S. mortgage lender, for actions related to the housing crisis. It also comes on the same day the company's shareholders are expected to vote on its sale to Bank of America. The acquisition is expected to close on July 1.Illinois attorney general says she'll sue Countrywide Financial - (www.latimes.com)Chrysler Taps $2 Billion Line of Credit - (online.wsj.com) Chrysler LLC tapped a $2 billion credit line from its owners, Cerberus Capital Management LP and Daimler AG, to bolster the auto maker's liquidity amid a painful downturn in U.S. sales that is stretching its resources.California Police Gone Wild: Charity carnival scrapped because of police fees – (www.insidebayarea.com/argus). First Vallejo police/fire department cause Vallejo to file for bankruptcy. Now Police departments are padding their pay by mandating police coverage (rather than private security) at town events. But a carnival fundraiser the group had planned to begin Thursday in Fremont has fizzled because of high police fees, organizers said. The carnival was set to start at the Hub shopping center, but league Executive Director Shirley Sisk said the hoped-for take of up to $30,000 through the weekend was offset by an expected $21,000 bill from Fremont police for security. Gorman said his understanding is that the police department wanted seven officers, two gang task force members and a dispatcher at the Hub event at time-and-a-half pay rather than private security that Butler typically hires at a fraction of the cost.The Market Created the Money, Not the State - (www.brookesnews.com) – Of course, this conservative think-tank would never blame the Republican Admin or the Fed for creating this credit mess due to lowering interest rates to 1%. Marshals Make Millions Serving Foreclosure Papers - (www.ml-implode.com) Last year, John T. Fiorillo earned almost twice as much as University of Connecticut women’s basketball coach Geno Auriemma and more than 10 times the salary of Gov. M. Jodi Rell. The Bristol resident grossed more than $2 million, but not by coaching a team to the Final Four or running state government. Fiorillo is a self-employed state marshal who serves legal papers to people about to lose their homes through foreclosure. Fiorillo’s bounty can be attributed to his relationship with two law firms — Hunt Leibert Jacobson and Reiner, Reiner and Bendett — that have a virtual monopoly on the burgeoning foreclosure market.CIBC likely to take big Q3 writedown - (www.reuters.com)GMAC's $60 Billion Deal Loses Confidence as Mortgages - (www.bloomberg.com)Rebate checks diverted to pay $2B in debts - (www.usatoday.com) About $2 billion in economic stimulus rebate checks are being confiscated to pay overdue bills for child support, student loans and back taxes, the government says. So far, 1.8 million rebate checks have been intercepted by Treasury Department computers showing that individuals owe money to federal or state governments.